In trademark dispute involving foreign mark, Second Circuit upholds summary judgment for Defendant since New York law demands that foreign holder produce evidence that Defendant's potential New York customers primarily associate foreign Plaintiff's mark with Plaintiff
Plaintiffs here are ITC Limited and ITC Hotels Limited (collectively Plaintiffs); they sued Punchgini Inc., and Bukhara Grill II, Inc. (Defendants), in a New York federal court. They alleged infringements of various federal and New York trademark laws along with unfair competition relating to the restaurant trademark "Bukhara." Plaintiffs had not used the mark and the related trade dress in the U.S. for more than three years.
The District Court gave summary judgment to the Defendants, and Plaintiffs appealed. The U.S. Court of Appeals for the Second Circuit affirms.
In previous litigation, the Court had affirmed the grant of summary judgment on Plaintiff's trademark infringement claims under Section 32(1)(a) of the federal Lanham Act and New York common law; it held that Plaintiff had abandoned its "Bukhara" mark as applied to restaurant services in the U.S. The Court had also affirmed the denial of Plaintiffs' federal unfair competition claim because it turned on the "famous marks" doctrine, which Congress had not yet incorporated into federal trademark law.
Because the famous marks doctrine might support a New York common law claim for unfair competition, however, the Court certified two state law questions to the New York Court of Appeals: (1) "Does New York common law permit the owner of a federal mark or trade dress to assert property rights therein by virtue of the owner's prior use of the mark or dress in a foreign country?"; and (2) "If so, how famous must a foreign mark be to permit a foreign mark owner to bring a claim for unfair competition?"
The New York Court of Appeals answered the first question in the affirmative. The specific principle is that "when a business, through renown in New York, possesses goodwill constituting property or commercial advantage in this state, that goodwill is protected from misappropriation under New York unfair competition law. This is so whether the business is domestic or foreign." [Slip op. 3]
The New York Court of Appeals answered the second question as follows. Protection from misappropriation of a famous foreign mark presupposes the existence of actual goodwill in New York. If the foreign party has no goodwill in New York, then there can be no unfair competition based on a misappropriation theory. At a minimum, consumers of the good or service at issue must primarily associate the mark with the foreign plaintiff.
The lower court identified the following factors as potentially relevant: (1) evidence that the defendant intentionally associated goods with those of the foreign Plaintiff in the minds of the public, such as public statements or advertising stating or implying a connection with the foreign Plaintiff; (2) direct evidence, such as consumer surveys, indicating that consumers of defendant's goods or services believe them to be associated with the plaintiff; and (3) evidence of actual overlap between customers of the New York Defendant and the foreign Plaintiff.
The New York Court of Appeals observed that, to prevail against Defendants on an unfair competition theory under New York law, Plaintiff would have to show, that Defendants appropriated Plaintiff's "Bukhara" mark or trade dress for their New York restaurants. If that is the case, Plaintiff would then have to prove that the relevant consumer market for New York's Bukhara restaurant primarily associates the Bukhara mark or trade dress with those Bukhara restaurants owned and operated by foreign Plaintiff. In sum, to pursue an unfair competition claim, Plaintiff must present proof of both deliberate copying and "secondary meaning."
The Second Circuit agrees with the lower court's finding that enough evidence of deliberate copying exists here to satisfy that element of the claim. The Court then reviews the sufficiency of Plaintiff's showing of "secondary meaning."
Plaintiff failed to create a genuine issue of material fact as to whether the Bukhara mark, when used in New York, calls Plaintiff's restaurants to the minds of Defendants' potential customers. "[Plaintiff's] evidence of goodwill [was] derived entirely from foreign media reports and sources and was unaccompanied by any evidence that would permit an inference that such reports or sources reach the relevant consumer market in New York. ... [Plaintiff] proffered no evidence that it had "directly targeted advertising of its Indian or other foreign "Bukhara' restaurants to the U.S.'"
"It made no attempt to prove its goodwill in the relevant market through consumer study evidence linking the Bukhara mark to itself, and it presented no research reports demonstrating strong brand name recognition for the Bukhara mark anywhere in the U.S. Moreover, the record is devoid of any evidence of actual overlap between customers of Defendants' restaurant and [Plaintiff's] Bukhara, aside from [Plaintiff's] own inadmissible speculation."
"Absent admissible evidence, however, a reasonable factfinder could not conclude that potential customers of Defendants' restaurant would primarily associate the Bukhara mark with Plaintiff, particularly in light of evidence that numerous Indian restaurants in Massachusetts, Washington, Virginia, and around the world have used the name "Bukhara,' all without any affiliation or association with [Plaintiff]." [Slip op. 6]
"[Plaintiff's] belated efforts to identify admissible evidence of secondary meaning are unavailing. First, [Plaintiff] points to record evidence that a significant number of Defendants' customers are Indian or "well traveled [people who] know what authentic Indian food tastes like.' Even if these facts support a reasonable inference that this consumer market is "more knowledgeable about India than the general New York population,' [Plaintiff] provides no evidence"apart from its own conjecture"to support the conclusion that, as a consequence, these persons "primarily associate' the name "Bukhara' with [Plaintiff]. Conjecture, of course, is insufficient to withstand summary judgment."
"Second, [Plaintiff] argues that the district court failed to consider evidence of "public statements or advertising stating or implying a connection with the foreign Plaintiff.' [The appellate court] is not persuaded. The district court plainly considered this evidence and concluded that it supported [Plaintiff's] claim of intentional copying."
"Moreover, the district court recognized that "there may be some circumstances in which intentional copying is sufficient to show "secondary meaning.' But it cogently explained why this was not such a case: "it would be tautological to conclude that copying alone demonstrates "secondary meaning' sufficient to permit an unfair competition claim as to a foreign mark here, where that copying is only prohibited by the "well known' or "famous' mark exception if the mark has "secondary meaning.'"
"We adopt this reasoning as consistent with the New York Court of Appeals' conclusion that more than copying is necessary for a famous foreign mark holder to pursue a state law claim for unfair competition. That foreign holder must further offer evidence that the Defendants' potential customers "primarily associate[]' the mark with the foreign holder.' [Plaintiff] cannot satisfy this burden simply by pointing to evidence of obvious similarities between Defendants' Bukhara Grill and [Plaintiff's] own Bukhara restaurant, because such evidence is no proof that Defendants' potential customers were even aware of the existence of [Plaintiff's] Bukhara." [Slip op. 6 7].
Citation: ITC Hotels Ltd. v. Punchgini, Inc., 2008 WL 612326 (2d Cir. 2008).
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